Federal Acquisition Regulation; Modular Contracting

Part III

Department of Defense

General Services Administration

National Aeronautics and Space Administration

_______________________________________________________________________

48 CFR Part 39

Federal Acquisition Regulation; Modular Contracting; Proposed Rule

Proposed Rules

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 39

[FAR Case 96-605]

RIN 9000-AH55

Federal Acquisition Regulation; Modular Contracting

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

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

ACTION: Proposed rule with request for comment and notice of public

meeting.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council are issuing a proposed amendment to the

Federal Acquisition Regulation (FAR) to address the requirements of

Public Law 104-106, the Information Technology Management Reform Act

(ITMRA) of 1996, regarding acquisition of information technology (IT)

using modular contracting techniques. 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: Public Meeting: April 28, 1997, 9:00 a.m. until 12:00 p.m.

Written Statements Due: April 22, 1997.

Comments Due: Comments should be submitted on or before May 27,

1997 to be considered in the formulation of a final rule.

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: Public Meeting: April 28, 1997, 9:00 a.m. until 12:00 p.m.

Written Statements Due: April 22, 1997.

Comments Due: Comments should be submitted on or before May 27,

1997 to be considered in the formulation of a final rule.

ADDRESSES: Comments: Interested parties should submit written comments

and copies of their oral presentations to: General Services

Administration, FAR Secretariat (MVR), 1800 F Street, NW, Room 4035,

Washington, DC 20405.

Internet: E-mail comments should be addressed to: www.arnet.gov">96-

605@www.arnet.gov.

Public Meeting: GSA Auditorium, 1800 F Street, NW (First Floor),

Washington, DC 20405.

Please cite FAR case 96-605 in all correspondence related to this

case.

FOR FURTHER INFORMATION CONTACT: Mr. Jack O'Neill at (202) 501-3856 in

reference to this FAR case. For general information, contact the FAR

Secretariat, Room 4035, GS Building, Washington, DC 20405 (202) 501-

4755. Please cite FAR case 96-605.

SUPPLEMENTARY INFORMATION:

A. Background

Division E of Public Law 104-106, ITMRA, at Section 5202, enacted

new policies and procedures for the acquisition of IT and directed that

they be implemented in the FAR. Specifically, ITMRA requires that

coverage for modular contracting be included in the FAR.

The following coverage addresses that ITMRA requirement by

proposing to provide guidance to Federal agencies about using modular

contracting, to the maximum extent practicable, when acquiring major

systems of information technology. When using a modular contracting

approach, agencies acquire major IT acquisitions by dividing them into

smaller, more manageable increments. ITMRA indicates that agencies

should complete the award of each successive module in a shorter time

frame, preferably within 180 days from the date when a solicitation is

issued

Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The rule would

not impose any specific cost burden on small entities, over and above

what burden the marketplace demands for modular contracting compliance.

The modular contracting approach should slightly benefit small entities

because use of modular contracting techniques should increase the

number of business opportunities available to them. When a modular

contracting approach is used, large complex IT systems will be divided

into smaller, discrete increments that may subsequently be made

available to small business entities to bid and manage. The proposed

rule would provide needed coverage to ensure that ITMRA is implemented

regarding use of modular contracting for the acquisition of IT systems.

An Initial Regulatory Flexibility Analysis has, therefore, not been

performed. Comments from small entities concerning the affected FAR

part will be considered in accordance with 5 U.S.C. 610 of the Act.

Such comments must be submitted separately and should cite 5 U.S.C.

601, et seq. (FAR case 96-605), 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 Part 39

Government procurement.

Dated: March 20, 1997.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, it is proposed that 48 CFR Part 39 be amended as set

forth below:

PART 39--ACQUISITION OF INFORMATION TECHNOLOGY

1. The authority citation for 48 CFR Part 39 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).

2. Section 39.002 is amended by adding in alphabetical order the

definition of ``Modular contracting'' to read as follows:

39.002 Definitions.

at 48 CFR Part 39 be amended as set

forth below:

PART 39--ACQUISITION OF INFORMATION TECHNOLOGY

1. The authority citation for 48 CFR Part 39 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).

2. Section 39.002 is amended by adding in alphabetical order the

definition of ``Modular contracting'' to read as follows:

39.002 Definitions.

Modular contracting, as used in this part, means use of one or more

contracts to acquire information technology systems in successive,

interoperable increments.

* * * * *

3. Section 39.103 is added to read as follows:

39.103 Modular contracting.

(a) This section implements Section 5202, Incremental Acquisition

of Information Technology, of the Clinger-Cohen Act of 1996 (Public Law

104-106). Modular contracting is intended to reduce program risk and to

incentivize

contractor performance while meeting the Government's need for timely

access to rapidly changing technology. Consistent with the agency's

information technology architecture, agencies should, to the maximum

extent practicable, use modular contracting to acquire major systems

(see FAR 2.101) of information technology. Agencies may also use

modular contracting to acquire non-major systems of information

technology.

(b) When using modular contracting, an acquisition of a system of

information technology may be divided into several smaller acquisition

increments that--

(1) Are easier to manage individually than would be possible in one

comprehensive acquisition;

(2) Address complex information technology objectives incrementally

in order to enhance the likelihood of achieving workable systems or

solutions for attainment of those objectives;

(3) Provide for delivery, implementation, and testing of workable

systems or solutions in discrete increments, each of which comprises a

system or solution that is not dependent on any subsequent increment in

order to perform its principal functions; and

objectives incrementally

in order to enhance the likelihood of achieving workable systems or

solutions for attainment of those objectives;

(3) Provide for delivery, implementation, and testing of workable

systems or solutions in discrete increments, each of which comprises a

system or solution that is not dependent on any subsequent increment in

order to perform its principal functions; and

(4) Provide an opportunity for subsequent increments to take

advantage of any evolution in technology or needs that occur during

implementation and use of the earlier increments.

(5) Reduce risk of potential adverse consequences on the overall

project by isolating and avoiding custom-designed components of the

system.

(c) The characteristics of an increment may vary depending upon the

type of information technology being acquired and the nature of the

system being developed. The following factors may be considered:

(1) To promote compatibility, the information technology acquired

through modular contracting for each increment should comply with

common or commercially acceptable information technology standards when

available and appropriate, and shall conform to the agency's master

information technology architecture.

(2) The performance requirements of each increment should be

consistent with the performance requirements of the completed, overall

system within which the information technology will function and should

address interface requirements with succeeding increments.

(d) For each increment, contracting officers shall choose an

appropriate contracting technique that facilitates the acquisition of

subsequent increments. Pursuant to parts 16 and 17, contracting

officers shall select the contract type and method appropriate to the

circumstances (e.g., indefinite delivery, indefinite quantity

contracts, single contract with options, successive contracts, multiple

awards). Contract(s) shall be structured to ensure that the Government

is not required to procure additional increments.

on of

subsequent increments. Pursuant to parts 16 and 17, contracting

officers shall select the contract type and method appropriate to the

circumstances (e.g., indefinite delivery, indefinite quantity

contracts, single contract with options, successive contracts, multiple

awards). Contract(s) shall be structured to ensure that the Government

is not required to procure additional increments.

(e) To avoid obsolescence, a modular contract for information

technology should, to the maximum extent practicable, be awarded within

180 days after the date on which the solicitation is issued. If award

cannot be made within 180 days, agencies should consider cancellation

of the solicitation in accordance with FAR 14.209 or 15.606(b)(4). To

the maximum extent practicable, deliveries under the contract should be

scheduled to occur within 18 months after issuance of the solicitation.

[FR Doc. 97-7606 Filed 3-26-97; 8:45 am]

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