Federal Acquisition Regulation; Competition Under Multiple-Award Contracts

SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council (Councils) are proposing to amend the

Federal Acquisition Regulation (FAR) to clarify what contracting

officers should consider when planning for multiple awards of

indefinite-delivery contracts and clarify how orders should be placed

against the resultant contracts.

DATES: Interested parties should submit comments in writing on or

before February 14, 2000 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:

[email protected].

Please submit comments only and cite FAR case 1999-014 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 Mr. Ralph De Stefano, Procurement Analyst, at (202)

501-1758. Please cite FAR case 1999-014.

SUPPLEMENTARY INFORMATION:

A. Background

The proposed rule amends FAR Part 16 to provide policy on multiple-

award task and delivery-order contracts; amends FAR Part 37 to delete a

definition; and amends FAR Part 2 to insert the definition that was

deleted from Part 37. The proposed rule also clarifies the FAR's

current implementation of sections 1004 and 1054 of the Federal

Acquisition Streamlining Act of 1994 (Pub. L. 104-355). The rule

reinforces key principles regarding the structure, administration, and

use of multiple award task and delivery order contracts, such as the

expectation of providing awardees a fair opportunity to be considered

for orders throughout the life of the contract. The rule provides

policy that clarifies what contracting officers should consider when

planning for multiple award of indefinite-delivery contracts and

clarifies how orders should be placed against the resultant contracts.

The rule continues to provide contracting officers broad

discretion. It includes streamlined ordering processes that provide

effective, flexible, and timely solutions for agency requirements

through orders placed under multiple award task or delivery order

contracts.

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 not 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 the rule

only clarifies what the contracting officer should consider when

planning for and placing orders under multiple-award contracts.

Therefore, we have not prepared an Initial Regulatory Flexibility

Analysis. We invite comments from small businesses and other interested

parties. The Councils will consider comments from small entities

concerning the affected FAR subparts in accordance with 5 U.S.C. 610.

Interested parties must submit such comments separately and should cite

5 U.S.C. 601, et seq. (FAR case 1999-014), 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 2, 16, and 37:

Government procurement.

Dated: December 9, 1999.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, DoD, GSA, and NASA propose that 48 CFR Parts 2, 16, and

37 be amended as set forth below:

1. The authority citation for 48 CFR Parts 2, 16, and 37 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 2--DEFINITIONS OF WORDS AND TERMS

2. Amend section 2.101 by adding, in alphabetical order, the

definition ``Advisory and assistance services'' to read as follows:

2.101 Definitions.

* * * * *

Advisory and assistance services means those services provided

under contract by nongovernmental sources to support or improve:

organizational policy development; decision-making; management and

administration; program and/or project management and administration;

or R&D activities. It can also mean the furnishing of professional

advice or assistance rendered to improve the effectiveness of Federal

management processes or procedures (including those of an engineering

and technical nature). In rendering the foregoing services, outputs may

take the form of information, advice, opinions, alternatives, analyses,

evaluations, recommendations, training and the day-to-day aid of

support personnel needed for the successful performance of ongoing

Federal operations. All advisory and assistance services are classified

in one of the following definitional subdivisions:

(a) Management and professional support services, i.e., contractual

services that provide assistance, advice or training for the efficient

and effective management and operation of organizations, activities

(including management and support services for R&D activities), or

systems. These services are normally closely related to the basic

responsibilities and mission of the agency originating the requirement

for the acquisition of services by contract. Included are efforts that

support or contribute to improved organization of program management,

logistics management, project monitoring and reporting, data

collection, budgeting, accounting, performance auditing, and

administrative technical support for conferences and training programs.

[[Page 70159]]

(b) Studies, analyses and evaluations, i.e., contracted services

that provide organized, analytical assessments/evaluations in support

of policy development, decision-making, management, or administration.

Included are studies in support of R&D activities. Also included are

acquisitions of models, methodologies, and related software supporting

studies, analyses or evaluations.

(c) Engineering and technical services, i.e., contractual services

used to support the program office during the acquisition cycle by

providing such services as systems engineering and technical direction

(see 9.505-1(b)) to ensure the effective operation and maintenance of a

weapon system or major system as defined in OMB Circular No. A-109 or

to provide direct support of a weapon system that is essential to

research, development, production, operation or maintenance of the

system.

* * * * *

PART 16--TYPES OF CONTRACTS

3. Revise section 16.500 to read as follows:

16.500 Scope of subpart.

(a) This subpart prescribes policies and procedures for making

awards of indefinite-delivery contracts and establishes a preference

for making multiple awards of indefinite-quantity contracts.

(b) This subpart does not limit the use of other than competitive

procedures authorized by part 6.

(c) Nothing in this subpart restricts the authority of the General

Services Administration (GSA) to enter into schedule, multiple award,

or task or delivery order contracts under any other provision of law.

Therefore, GSA regulations and the coverage for the Federal Supply

Schedule program in subpart 8.4 and part 38 take precedence over this

subpart.

(d) The multiple award preference established by this subpart 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 using the procedures in this

subpart, provided the selection of contractors and placement of orders

are consistent with subpart 36.6.

16.501-1 [Amended]

4. Amend section 16.501-1 by removing the definition ``Advisory and

assistance services.''

5. Revise section 16.504 to read as follows:

16.504 Indefinite-quantity contracts.

(a) Description. An indefinite-quantity contract provides for an

indefinite quantity, within stated limits, of supplies or services

during a fixed period. The Government places orders for individual

requirements. Quantity limits may be stated as number of units or as

dollar values.

(1) The contract must require the Government to order and the

contractor to furnish at least a stated minimum quantity of supplies or

services. In addition, if ordered, the contractor must furnish any

additional quantities, not to exceed the stated maximum. The

contracting officer should establish a reasonable maximum quantity

based on market research, trends on recent contracts for similar

supplies or services, survey of potential users, or any other rational

basis.

(2) To ensure that the contract is binding, the minimum quantity

must be more than a nominal quantity, but it should not exceed the

amount that the Government is fairly certain to order.

(3) The contract may also specify maximum or minimum quantities

that the Government may order under each task or delivery order and the

maximum that it may order during a specific period of time.

(4) A solicitation and contract for an indefinite quantity must--

(i) Specify the period of the contract, including the number of

options and any period for which the Government may extend the contract

under each option;

(ii) Specify the total minimum and maximum quantity of supplies or

services the Government will acquire under the contract;

(iii) Include a statement of work, specifications, or other

description, that reasonably describes the general scope, nature,

complexity, and purpose of the supplies or services the Government will

acquire under the contract in a manner that will enable a prospective

offeror to decide whether to submit an offer;

(iv) State the procedures that the Government will use in issuing

orders and, if multiple awards may be made, state the procedures and

selection criteria that the Government will use to provide awardees a

fair opportunity to be considered for each order (see 16.505(b)(1));

(v) Include the name, address, telephone number, facsimile number,

and e-mail address of the agency task and delivery order ombudsman (see

16.505(b)(5)) if multiple awards may be made;

(vi) Include a description of the activities authorized to issue

orders; and

(vii) Include authorization for placing oral orders, if

appropriate, provided that the Government has established procedures

for obligating funds and that oral orders are confirmed in writing.

(b) Application. Contracting officers may use an indefinite-

quantity contract when the Government cannot predetermine, above a

specified minimum, the precise quantities of supplies or services that

the Government will require during the contract period, and it is

inadvisable for the Government to commit itself for more than a minimum

quantity. The contracting officer should use an indefinite-quantity

contract only when a recurring need is anticipated.

(c) Multiple award preference--(1) Planning the acquisition. (i)

Except for indefinite-quantity contracts for advisory and assistance

services as provided in paragraph (c)(2) of this section, the

contracting officer must, to the maximum extent practicable, give

preference to making multiple awards of indefinite-quantity contracts

under a single solicitation for the same or similar supplies or

services to two or more sources.

(ii)(A) The contracting officer must determine whether multiple

awards are appropriate as part of acquisition planning. The contracting

officer must avoid situations in which awardees specialize exclusively

in one or a few areas within the broader statement of work, thus

creating the likelihood that tasks in those areas will be awarded on a

sole-source basis; however, each awardee need not be capable of

performing every requirement as well as any other awardee under the

contracts. The contracting officer should consider the following when

determining the number of contracts to be awarded:

(1) The scope and complexity of the contract requirement.

(2) The expected duration and frequency of task or delivery orders.

(3) The mix of resources a contractor must have to perform expected

task or delivery order requirements.

(4) The ability to maintain competition among the awardees

throughout the contracts' period of performance.

(B) The contracting officer must not use the multiple award

approach if--

(1) Only one contractor is capable of providing performance at the

level of quality required because the supplies or services are unique

or highly specialized;

(2) Based on the contracting officer's knowledge of the market,

more favorable terms and conditions, including pricing, will be

provided if a single award is made;

[[Page 70160]]

(3) The expected cost of administration of multiple contracts

outweighs the expected benefits of making multiple awards;

(4) The projected task orders are so integrally related that only a

single contractor can reasonably perform the work;

(5) The total estimated value of the contract is less than the

simplified acquisition threshold; or

(6) Multiple awards would not be in the best interests of the

Government.

(C) The contracting officer must document the decision in a written

acquisition plan or a separate written determination. The contracting

officer may determine that a class of acquisitions is not appropriate

for multiple awards (see subpart 1.7).

(2) Contracts for advisory and assistance services. (i) Except as

provided in paragraph (c)(2)(ii) of this section, if an indefinite-

quantity contract for advisory and assistance services exceeds 3 years

and $10 million, including all options, the contracting officer must

make multiple awards unless--

(A) The contracting officer or other official designated by the

head of the agency determines in writing, before the solicitation is

issued, that multiple awards are not practicable. The contracting

officer or other official must determine that the scope of work is

unique or highly specialized or the tasks so integrally related that

only one contractor can reasonably perform the work;

(B) The contracting officer or other official designated by the

head of the agency determines in writing, after the evaluation of

offers, that only one offeror is capable of providing the services

required at the level of quality required; or

(C) Only one offer is received.

(ii) The requirements of paragraph (c)(2)(i) of this section do not

apply if the contracting officer or other official designated by the

head of the agency determines that the advisory and assistance services

are incidental and not a significant component of the contract.

6. Revise section 16.505 to read as follows:

16.505 Ordering.

(a) General. (1) The contracting officer does not synopsize orders

under indefinite-delivery contracts.

(2) Individual orders must clearly describe all services to be

performed or supplies to be delivered. Orders must be within the scope,

period, and maximum value of the contract.

(3) Performance-based work statements must be used to the maximum

extent practicable, if the contract is for services (see 37.102(a)).

(4) Orders may be placed by using any medium specified in the

contract.

(5) Orders placed under indefinite-delivery contracts must contain

the following information:

(i) Date of order.

(ii) Contract number and order number.

(iii) For supplies and services, contract item number and

description, quantity, and unit price or estimated cost or fee.

(iv) Delivery or performance schedule.

(v) Place of delivery or performance (including consignee).

(vi) Any packaging, packing, and shipping instructions.

(vii) Accounting and appropriation data.

(viii) Method of payment and payment office, if not specified in

the contract (see 32.1110(e)).

(6) No protest under subpart 33.1 is authorized in connection with

the issuance or proposed issuance of an order under a task-order

contract or delivery-order contract, except for a protest on the

grounds that the order increases the scope, period, or maximum value of

the contract (10 U.S.C. 2304c(d) and 41 U.S.C. 303J(d)).

(b) Orders under multiple award contracts--(1) Fair opportunity.

(i) The contracting officer must provide each awardee a fair

opportunity to be considered for each order over $2,500 issued under

multiple delivery-order contracts or multiple task-order contracts,

except as provided for in paragraph (b)(2) of this section.

(ii) The contracting officer may exercise broad discretion in

developing appropriate procedures. The competition requirements in part

6 and the policies in subpart 15.3 do not apply to the ordering

process. However, the contracting officer must--

(A) Develop procedures that will provide each awardee a fair

opportunity to be considered for each order and that reflect the

requirement and other aspects of the contracting environment;

(B) Not use any method (such as allocation or designation of any

preferred awardee) that would not result in fair consideration being

given to all awardees prior to placing each order;

(C) Tailor the procedures to each acquisition;

(D) Include the procedures in the solicitation and the contract;

and

(E) Consider price or cost under each order as one of the factors

in the selection decision.

(iii) The contracting officer should consider the following when

developing the procedures:

(A)(1) Past performance on earlier orders under the contract,

including quality, timeliness and cost control.

(2) Potential impact on other orders placed with the contractor.

(3) Minimum order requirements.

(B) Formal evaluation plans or scoring of quotes or offers are not

required.

(C) Keep submission requirements to a minimum. Contracting officers

may use streamlined procedures, including oral presentations. In

addition, the contracting officer need not contact each of the multiple

awardees under the contract before selecting an order awardee if the

contracting officer has information available to ensure that each

awardee is provided a fair opportunity to be considered for each order.

(2) Exceptions to the fair opportunity process. The only exceptions

to the requirement to provide each awardee a fair opportunity to be

considered for each order in excess of $2,500 are--

(i) The agency need for the supplies or services is of such urgency

that providing such opportunity would result in unacceptable delays;

(ii) Only one awardee is capable of providing the supplies or

services required at the level of quality required because the supplies

or services ordered are unique or highly specialized;

(iii) The order should be issued on a sole-source basis in the

interest of economy and efficiency as a logical follow-on to an order

already issued under the contract, provided that all awardees were

given a fair opportunity to be considered for the original order; or

(iv) It is necessary to place an order to satisfy a minimum

guarantee.

(3) Pricing orders. If the contract did not establish the price for

the supply or service, establish prices for each order using the

policies and methods in subpart 15.4.

(4) Decision documentation for orders. Document in the contract

file the rationale for placement and price of each order.

(5) Task and Delivery Order Ombudsman. The head of the agency must

designate a task-order contract and delivery-order contract ombudsman.

The ombudsman must review complaints from contractors and ensure they

are afforded a fair opportunity to be considered, consistent with the

procedures in the contract. The ombudsman must be a senior agency

official who is independent of the contracting officer and may be the

agency's competition advocate.

(c) Limitation on ordering period for task-order contracts for

advisory and assistance services. (1) Except as

[[Page 70161]]

provided for in paragraphs (c)(2) and (3) of this section, the ordering

period of a task-order contract for advisory and assistance services,

including all options or modifications, normally may not exceed 5

years.

(2) The 5-year limitation does not apply when--

(i) A longer ordering period is specifically authorized by a

statute; or

(ii) The contract is for an acquisition of supplies or services

that includes the acquisition of advisory and assistance services and

the contracting officer, or other official designated by the head of

the agency, determines that the advisory and assistance services are

incidental and not a significant component of the contract.

(3) The contracting officer may extend the contract on a sole-

source basis only once for a period not to exceed 6 months if the

contracting officer, or other official designated by the head of the

agency, determines that--

(i) The award of a follow-on contract is delayed by circumstances

that were not reasonably foreseeable at the time the initial contract

was entered into; and

(ii) The extension is necessary to ensure continuity of services,

pending the award of the follow-on contract.

7. Amend section 16.506--

a. In paragraphs (a), (b), (c), (d)(1), and (e) by removing the

words ``The contracting officer shall insert'' and adding, in their

place, the word ``Insert'';

b. In paragraphs (d)(2), (d)(3), and (d)(4) by removing the words

``the contracting officer shall''; and

c. By revising paragraphs (d)(5), (f), and (g) to read as follows:

16.506 Solicitation provisions and contract clauses.

* * * * *

(d) * * *

(5) If the contract--

(i) Includes subsistence for Government use and resale in the same

schedule and similar products may be acquired on a brand-name basis;

and

(ii) Involves a partial small business set-aside, use the clause

with its Alternate IV.

* * * * *

(f) Insert the provision at 52.216-27, Single or Multiple Awards,

in solicitations for indefinite-quantity contracts that may result in

multiple contract awards. Do not use this provision for advisory and

assistance services contracts that exceed 3 years and $10 million.

Modify the provision to specify the estimated number of awards.

(g) Insert the provision at 52.216-28, Multiple Awards for Advisory

and Assistance Services, in solicitations for task-order contracts for

advisory and assistance services that exceed 3 years and $10 million

(including all options), unless a determination has been made under

16.504(c)(2)(i)(A). Modify the provision to specify the estimated

number of awards.

PART 37--SERVICE CONTRACTING

37.201 Definitions.

8. Amend section 37.201 by revising the section heading to read as

set forth above, and by removing the definition ``Advisory and

assistance services''.

[FR Doc. 99-32476 Filed 12-14-99; 8:45 am]

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