[Federal Register Volume 59, Number 22 (Wednesday, February 2, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2356]


[[Page Unknown]]

[Federal Register: February 2, 1994]


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OFFICE OF MANAGEMENT AND BUDGET

Office of Federal Procurement Policy

 

Management Oversight of Service Contracting

AGENCY: Executive Office of the President, Office of Management and 
Budget, Office of Federal Procurement Policy (OFPP).

ACTION: OFPP is requesting comments on proposed changes to OFPP Policy 
Letter 93-1, ``Management Oversight of Service Contracting'' which are 
set forth in Supplement No. 1 to the Policy Letter.

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SUMMARY: OFPP Policy Letter 93-1, ``Management Oversight of Service 
Contracting,'' was signed by the former OFPP Administrator on November 
19, 1993 and published in the Federal Register on December 2, 1993 (58 
FR 63593).
    The Policy Letter is now being revised with a goal of establishing 
a more ``results-oriented'' approach to providing agencies with best 
practices to use in managing and administering service contracts. The 
initial guidance neither prescribes specific improvements that agencies 
can make in this area nor ways that results can be measured. During 
this Administration, OFPP's activities will focus on two major 
objectives: streamlining the procurement process and achieving 
excellence in contractor performance. We believe that one way to 
improve contractor performance is to improve contract management and 
administration. In this regard, we plan to work with the agencies and 
industry to develop practices that represent best value in contract 
management and administration. This approach is in keeping with the 
National Performance Review principle of providing guiding principles 
rather than rigid rules. Hence, we are revising the Policy Letter, in 
particular sections 8a and 8b, to reflect this new approach. Agencies 
are encouraged to begin developing implementation strategies and 
initiating staff training to ensure effective implementation of the 
provisions of this revised Policy Letter until the Federal Acquisition 
Regulation (FAR) is changed.
    Since the December 2, 1993 Federal Register notice which also 
included the rescission of OMB Circular No. A-120, some agencies have 
raised concerns that the rescission of the Circular was effective 
immediately but the Policy Letter was not effective until 30 days after 
publication in the Federal Register. (OFPP has a statutory requirement 
to allow 30 days before any procurement policy can become effective.) 
We understand the concern, but it was our intent to make the rescission 
of Circular A-120 effective immediately, although we realize that it 
takes time to have the FAR guidance changed. In the interim, agencies 
are encouraged to review their internal procedures for managing and 
controlling the use of advisory and assistance services and determine 
what changes may be needed to ensure compliance with this revised 
Policy Letter. Some agencies may elect to use their existing management 
control procedures for all services covered by the Policy Letter until 
the FAR guidance is in place.
    We are issuing the following changes to the Policy Letter which are 
included in the attached Supplement No. 1:
    1. The second sentence under section 4 (Definition) is being 
revised to clarify that only nonpersonal services obtained under 
contract from the private sector (i.e., business firms, educational 
institutions, non-profits, and state and local governments) are 
covered. Services obtained through the use of interagency agreements 
are not covered by this Policy Letter.
    2. The second paragraph under section 5 (Exclusions) is revised to 
delete reference to the management oversight responsibilities which 
will be consistent with the revised paragraphs 8a. and 8b.
    3. The second introductory paragraph under section 7 (Good 
Management Practices) is being revised to delete reference to the 
requirement for individual and class reviews, and the reference to the 
responsible management official. Agencies must ensure that they are in 
compliance with appropriate OFPP Policy Letters applicable to service 
contracting and use good management practices and contract 
administration techniques when contracting for services.
    4. Paragraphs a. and b. under Section 8 (Responsibilities) are 
being revised in their entirety to incorporate the new ``best 
practices'' approach to managing and administering service contracts.
    5. Paragraph d. under section 8, which pertains to the Inspectors 
General, is being revised to ensure that any reviews are simply to 
ensure that agencies are in compliance with the revised Policy Letter.
    The guidance in section 7 which refers to the questions in the 
appendix A, and any resulting ``best practices'' models developed by 
OFPP in contract administration should not be viewed as mandatory 
regulatory guidance for audit purposes. We believe that agencies should 
use the questions as warning signals to prevent problems from occurring 
and the ``best practices'' models to help resolve those problems.
    All other provisions of the policy Letter remain unchanged.

COMMENT DATE: Comments must be received on or before March 4, 1994.

ADDRESSES. Comments should be sent to Dr. Steven Kelman, Administrator, 
Office of Federal Procurement Policy, Office of Management and Budget, 
Old Executive Office Building, room 352, Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT: Linda G. Williams, Deputy Associate 
Administrator, 202-395-3302.

List of Subjects

    Government Procurement.
Steven Kelman,
Administrator.
Policy Letter 93-1, Supplement No. 1
To the Heads of Executive Departments and Agencies
Subject: Management Oversight of Service Contracting.

    The purpose of this supplement to Policy Letter 93-1 is to 
provide agencies with a more ``results-oriented'' approach to 
managing and administering service contracts by introducing the 
``best practices'' concept. The Policy Letter was issued on November 
19, 1993 and published in the Federal Register on December 2, 1993 
(58 FR 63593).
    The following changes are being made to the Policy Letter:
    1. Section 4. Definition. The second sentence is revised to 
read: For purposes of this Policy Letter, only nonpersonal services 
obtained under contract are covered.
    2. Section 5. Exclusions. The second paragraph is revised to 
read:
    Services obtained under contracts below the small purchase 
threshold, through the use of interagency agreements, and that are 
incidental to supply contracts also are excluded from coverage of 
this Policy Letter. However, agencies should ensure that they are in 
compliance with appropriate OFPP Policy Letters applicable to 
service contracting and use good management practices and contract 
administration techniques when using these contracting methods to 
obtain services.
    3. Section 7. Good Management Practices. The second introductory 
paragraph is revised to read:
    The following sections offer guidance to ensure that good 
management practices are being followed. Agencies should involve 
procurement and program officials when developing requirements for 
service contracts. Appendix A contains a series of questions to help 
analyze and perfect service contract requirements within these 
guidelines. If the guidelines apply, and if the response to any of 
the questions listed in the Appendix is affirmative, agencies should 
ensure that they are in compliance with appropriate OFPP Policy 
Letters applicable to service contracting and use good management 
practices and contract administration techniques.
    4. Section 8. Responsibilities. Paragraphs a., b., and d. are 
revised to read:
    a. Heads of Agencies. Agency heads (or their designees) should 
ensure that:
    (1) Requirements for services are clearly defined and 
appropriate performance standards are developed so that contractor 
performance meets contract terms and conditions.
    (2) Service contracts are awarded and administered in such a 
manner that will provide the customer its goods and services on 
time, and within budget.
    (3) Specific procedures are in place when contracting for 
services to assure compliance with OFPP Policy Letter 92-1, 
Inherently Governmental Functions (57 FR 45096 (1992), 91-2, Service 
Contracting (56 FR 15110 (1991), and 89-1, Conflicts of Interest 
Policies Applicable to Consultants, 54 FR 51805 (1989).
    (4) Implementation strategies are developed and necessary staff 
training is initiated to assure effective implementation of these 
policies.
    b. Contracting Officials. Contracting officials should ensure 
that ``best practice'' techniques, such as those set forth below, 
are used when contracting for services:
    (1) The corporate experience section of a contractor's bid 
proposal should be reviewed to detect conflicts of interest. 
Usually, the corporate experience section contains the contractor's 
prior business clients.
    (2) Monthly progress reports should be reviewed to detect 
whether the contractor may be performing inherently governmental 
functions.
    Contracting officials should also seek other best practices 
techniques in contract management and administration that may be 
used within their own contracting activities or other agencies that 
will help to achieve excellence in contractor performance. OFPP will 
also be working to develop governmentwide ``best practices'' models 
in contract administration which will be issued as separate 
guidance.
    d. Inspectors General. The Inspectors General are encouraged to 
conduct vulnerability assessments of service contracting and, where 
warranted, include in their annual plans a review of service 
contracts to ensure compliance with the Policy Letter.
    The guidance in section 7 which refers to the questions in 
appendix A, and any resulting ``best practices'' models developed by 
OFPP should not be viewed as mandatory regulatory guidance for audit 
purposes.
    All other provisions of the Policy Letter remain unchanged.
    Information Contact. For information regarding this Supplement, 
contact Linda G. Williams, Deputy Associate Administrator, Office of 
Federal Procurement Policy, 725 17th Street, NW., room 9001, 
Washington, DC 20503. Telephone (202) 395-3302.
    Effective Date. This supplement is effective 30 days after the 
date of publication in the Federal Register.
Steven Kelman,
Administrator.
[FR Doc. 94-2356 Filed 2-1-94; 8:45 am]
BILLING CODE 3110-01-M