[Federal Register Volume 59, Number 42 (Thursday, March 3, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4771]


[[Page Unknown]]

[Federal Register: March 3, 1994]


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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1807, 1834, 1852, and 1870

 

Changes to NASA FAR Supplement Streamlining the Major System 
Acquisition Process by Eliminating the Requirement for a Formal 
Solicitation Between Each Phase of the Procurement

AGENCY: Office of Procurement, Procurement Policy Division, National 
Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: This notice amends the NASA FAR Supplement to provide for 
selection/down-selection between phases of a Major System Acquisition 
utilizing a streamlined approach that eliminates the previous NASA 
requirement to provide a new, formal solicitation for each phase of the 
acquisition.

EFFECTIVE DATE: March 31, 1994.

FOR FURTHER INFORMATION CONTACT:
Tom O'Toole, NASA Headquarters, Office of Procurement, Procurement 
Policy Division (Code HP), Washington, DC 20546. Telephone: (202) 358-
0478.

SUPPLEMENTARY INFORMATION: 

Background

    On November 4, 1993, an interim rule to amend the NASA FAR 
Supplement to streamline the major system acquisition process was 
published in the Federal Register for comment (58 FR 58791-58798). In 
addition to pointing out errata and inconsistencies that are corrected 
in the final rule, the public comments on the interim rule addressed 
several substantive issues and suggested NASA consider revising its 
policy to address them.
    The first of these issues is that the NASA interim rule, by 
prohibiting the establishment of contractual requirements for 
subsequent phase proposals, may not provide a mechanism to ensure that 
the contractors in the initial phase of the procurement complete their 
efforts and submit proposals for the subsequent phase in a timely and 
responsive manner. The comment suggests that, absent the appropriate 
leverage, contractors could ``game'' the system to gain a competitive 
advantage in the down-selection by delaying proposal submission until 
their designs matured. The comment recommends that NASA revise its 
interim rule to ensure the integrity of the process in this area.
    Although the comment correctly cites the NASA prohibition against 
establishing a contract requirement for subsequent phase proposals, it 
apparently misunderstands the NASA policy relative to requesting these 
proposals and ensuring their timely submittal. As stated in the interim 
rule, NASA will request proposals for the subsequent phase of the 
procurement from the preceding phase contractors (and any outside 
source that wishes to submit one) at a defined point during initial 
phase performance. This request will advise offerors that proposals 
will be required by a date certain and that FAR 52.215-10, Late 
Submissions, Modifications, and Withdrawals of Proposals, applies. This 
clause states that any proposal received after the required submission 
date will not be considered unless one of the specified exceptions 
applies. Consequently, if an initial phase contractor does not submit a 
proposal by the due date and one of the exceptions in FAR 52.215-10 
does not apply, they forfeit the opportunity to continue in the 
competition, and the procurement will proceed without them. NASA 
believes that this procedure best suits our goals. We are not 
interested in requiring a contractor to submit a proposal if that 
offeror believes its design approach is not competitive. To do so would 
be to force a contractor to expend its resources in pursuit of a 
contract it has no reasonable expectation of winning, and the resultant 
``competition'' could fairly be labeled a sham. Moreover, we expect 
contractors in progressive competition procurements to be committed to 
satisfying our requirements, and to work diligently toward providing, 
at the times specified, the products required for the Government's 
down-selection decisions. It is not in their interests to do otherwise. 
The hypothetical instance described in the public comment of a 
contractor attempting to ``game'' the system is effectively precluded 
by the proposal request procedures described above that would eliminate 
them from consideration for subsequent phase awards. No revision to our 
policy is necessary in this area.
    A second public comment requested clarification of the interim rule 
to address the issue of proposals submitted for subsequent phases by 
sources other than the preceding phase contractors and how they would 
be treated. By way of example, the comment questioned whether such 
outside offerors have the right to protest and debriefing.
    NASA's progressive competitions are full and open competitions 
throughout the process. All proposals received, whether from preceding 
phase contractors or from outside sources, are considered to be 
solicited and are given full, unbiased evaluation under NASA SEB 
procedures. Since outside offerors enjoy the same standing as the 
preceding phase contractors, they have the full rights of any offeror 
on a NASA procurement, including protest and debriefing. To accord a 
diminished set of rights to outside offerors would compromise both the 
commitment to full and open competition and the agency's source 
selection process. Even-handed treatment of all offerors is inherent in 
both our SEB procedures and the progressive competition policy, and no 
revision to our policy is necessary to address the public comment.
    A third public comment requested further definition of the proposal 
preparation information that will be provided to offerors who are not 
preceding phase contractors.
    The NASA interim rule specifies that such information includes the 
``previously issued solicitation; the preceding phase contracts; the 
preceding phase system performance and design requirements; all 
proposal preparation instructions; and evaluation factors, subfactors 
and elements''. NASA considers this list to be adequately inclusive for 
a policy that must address a wide range of programs. Individual 
programs will have unique information that will be provided to outside 
offerors, but these requirements cannot be anticipated at this time. No 
revision to our policy is necessary in this area.
    The last substantive public comment recommended clarification of 
the procedure in 1834.005-1(d)(7) by which subsequent phase offerors 
other than initial phase contractors are eliminated from the 
competition if their proposals do not demonstrate a design maturity 
equivalent to that of the preceding phase contracts. The comment 
suggested that this process be explicitly linked to the competitive 
range standard in FAR 15.609(b).
    Elimination of an offeror is technically a competitive range 
determination. Accordingly, we believe that explicit linkage of 
1834.005-1(d)(7) and FAR 15.609(b) is unnecessary. Furthermore, NASA 
source selection procedures in 1815.613-71(b) already discuss 
elimination of offerors with more precision than a cross reference to 
the FAR would provide. Under these procedures, offerors may be 
eliminated at several points during the selection process, the first of 
which is through an initial identification of unacceptable proposals. 
This process occurs during initial review, before the proposal is 
formally scored or evaluated against the evaluation factors. At this 
time, if a proposal's deficiencies are clearly of such a magnitude that 
it warrants discontinuance of the evaluation, NASA eliminates that 
proposals from further consideration. The procedures of 1834.005-
1(d)(7) cited in the public comment relate to this process. For those 
proposals still under consideration, NASA performs a full evaluation 
against the evaluation factors and makes a competitive range 
determination based on that evaluation. These long-standing procedures 
provide a clear description of the NASA evaluation process. Adoption of 
the public comment recommendation would only cloud this description, 
and no change is made to the interim rule in this area.
    NASA is adopting as a final rule the text set out in the interim 
rule with minor changes that have no significant effect on the 
substance of the interim rule. First, the interim rule did not specify 
dates for the two clauses added to the NASA FAR Supplement, 1852.234-70 
and 1852.234-71. These clauses are dated November 1993 in this final 
rule. Second, the interim rule included a number of references to NASA 
Management Instruction (NMI) 7102.4, ``Management of Major System 
Programs and Projects.'' Several of these references should also have 
cited the NMI's companion NASA Handbook (NHB) 7120.5, ``Management of 
Major System Programs and Projects Handbook''. These NHB references are 
included in this final rule. Third, a number of editorial changes are 
made to correct errata and inconsistencies in the publishes interim 
rule.

Impact

    NASA certifies that this regulation will not have a significant 
economic effect on a substantial number of small entities under the 
Regulatory Flexibility Act (5 U.S.C. et seq.). This rule does not 
impose any reporting or recordkeeping requirements subject to the 
Paperwork Reduction Act.

List of Subjects in 48 CFR Parts 1807, 1834, 1852, and 1870

    Government procurement.
Deidre A. Lee,
Associate Administrator for Procurement.

    1. The authority citation for 48 CFR parts 1807, 1834, 1852, and 
1870 continues to read as follows:


    Authority: 42 U.S.C. 2473(c)(1).

PART 1807--ACQUISITION PLANNING

    2. Section 2807.170-1 is amended by revising the last sentence of 
paragraph (a) to read as follows:


1807.170-1  Procurement plans requiring approval by NASA headquarters.

    (a) * * * Separate authorization must be obtained for each phase in 
accordance with the procedures of NASA Management Instruction (NMI) 
7120.4, ``Management of Major System Programs and Projects,'' and NASA 
Handbook (NHB) 7120.5, ``Management of Major System Programs and 
Projects Handbook.''
* * * * *

PART 1834--MAJOR SYSTEM ACQUISITION

    3. Section 1834.000 is amended by revising the first sentence to 
read as follows;


1834.000  Scope.

    NASA's implementation of OMB Circular No. A-109, Major Systems 
Acquisitions, and (FAR) 48 CFR part 34 is contained in this part, 
subpart 18-70.5, and in NASA Management Instruction (NMI) 7120.4, 
``Management of Major System Programs and Projects,'' and NASA Handbook 
(NHB) 7120.5, ``Management of Major System Programs and Projects 
Handbook.'' * * *
    4. In section 1834.001, paragraph (b) is amended to read as 
follows:


1834.001  Definitions.

* * * * *
    (b) Major system. Any system that: Is directed at and critical to 
fulfilling an agency mission; entails the allocation of a relatively 
large amount of resources; or warrants special management attention. 
Designation of a system as ``major'' is made in accordance with NMI 
7120.4, ``Management of Major System Programs and Projects,'' and NHB 
7120.5, ``Management of Major System Programs and Projects Handbook.''
* * * * *
    5. In section 1834.005-1, paragraph (a) is revised to read as 
follows:


1834.005-1  Competition.

    (a) In procurements subject to the provisions of OMB Circular No. 
A-109 and NMI 7120.4 and NHB 7120.5, or other similar phased 
procurements, it is NASA policy to ensure competition in the selection 
of contractors for award in each phase of the process not performed in-
house.
* * * * *

PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


1852.234-70 and 1852.234-71  [Amended]

    6. In sections 1852.234-70 and 1852.234-71, the reference 
``(Date)'' after the clause title is revised to read ``(November 
1993)'' in each instance, and in section 1852.234-70, the word ``in'' 
in the first sentence of paragraph (c) of the clause is revised to read 
``on''.

PART 1870--NASA SUPPLEMENTARY REGULATIONS

    7. In section 1870.502, the first sentence is revised to read as 
follows:


1870.502  Regulations.

    The basic regulations governing major system acquisitions are 
Office of Management and Budget (OMB) Circular No. A-109, NASA 
Management Instruction (NMI) 7120.4 (``Management of Major System 
Programs and Projects'') and NASA Handbook (NHB) 7120.5 (``Management 
of Major System Programs and Projects Handbook''), and NASA FAR 
Supplement (NFS) 48 CFR 1834. * * *


1870.503, Appendix I  [Amended]

    8. In section 1870.503, Appendix I, section 2 is amended by 
revising paragraph 2.(b) and the third sentence of paragraph 2.(d) to 
read as follows:

Appendix I to 1870.503--NASA Procedures for Conducting Major System 
Acquisitions

* * * * *
    2. Definitions
* * * * *
    (b) Major system. Any system that: is directed at and critical to 
fulfilling an agency mission; entails the allocation of a relatively 
large amount of resources; or warrants special management attention. 
Designation of a system as ``major'' is made in accordance with NASA 
Management Instruction (NMI) 7120.4, ``Management of Major System 
Programs and Projects,'' and NASA Handbook (NHB) 7120.5, ``Management 
of Major System Programs and Projects Handbook.''
* * * * *
    (d) * * * The initial phase contracts are awarded, and the 
contractors for subsequent phases are expected to be chosen through a 
down-selection from among the preceding phase contractors. * * *
* * * * *
    9. In Section 1870.503, Appendix I, paragraph 3 is amended by 
revising paragraph 3.(a), first sentence, and paragraph 3.(b) to read 
as follows:
    3. Phases of a Major System Acquisition
    (a) As described in NMI 7120.4 and NHB 7120.5, there are five 
phases in the life cycle of a major system acquisition, three of which 
are normally included in a phased procurement: Phase B, Definition; 
Phase C, Design; and Phase D, Development. * * *
    (b) For a detailed description of the phases of a major system 
acquisition and their interrelationships, consult NHB 7120.5.
* * * * *
    10. In section 1870.503, Appendix I, paragraph 5 is amended by 
revising the last sentence of paragraph 5.(b) to read as follows:
    5. Progressive Competition Synopsis Requirements
* * * * *
    (b) * * * Each synopsis must be prepared in accordance with (FAR) 
48 CFR 5.207 and NFS 1834.005-1(d).
* * * * *
[FR Doc. 94-4771 Filed 3-2-94; 8:45 am]
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