[Federal Register Volume 59, Number 246 (Friday, December 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31595]


[[Page Unknown]]

[Federal Register: December 23, 1994]


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GENERAL SERVICES ADMINISTRATION

41 CFR Parts 201-1, 201-3, 201-20, and 201-39

[FIRMR Amendment 3]

RIN 3090-AF04

 

Amendment of FIRMR Provisions Relating to FIRMR Applicability, 
FIRMR Bulletins, and Present Value Analysis

AGENCY: Information Resources Management Service, GSA.

ACTION: Final rule.

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SUMMARY: This document amends the Federal Information Resources 
Management Regulation (FIRMR) regarding: FIRMR applicability provisions 
relating to the replacement of embedded Federal information processing 
FIP resources, the delivery of small or inconsequential quantities of 
FIP resources under non-FIP procurements, and the availability of 
guidance on interpreting FIRMR applicability provisions; the 
nonmandatory nature of FIRMR bulletins; and the use of OMB Circular A-
94 in performing present value analysis when evaluating bids and 
proposals.

EFFECTIVE DATE: January 23, 1995.

FOR FURTHER INFORMATION CONTACT:
Anne Horth, telephone FTS/Commercial (202) 501-0960 (v) or (202) 501-
0657 (tdd).

SUPPLEMENTARY INFORMATION: (1) This amendment was published in a notice 
of proposed rulemaking in the January 3, 1994 issue of the Federal 
Register. All comments were considered and, where possible, were 
incorporated into the amendment. Some comments, which would involve 
amendments beyond what was intended in these revisions, were not 
adopted so that this amendment could be issued as quickly as possible 
to allow agencies to take advantage of the new exceptions to the FIRMR. 
The comments that were not fully accommodated are discussed below:
    (a) A number of comments related to the new $500,000 exception to 
FIRMR applicability for small quantities of FIP resources. Several 
respondents felt that the exception should be expanded by increasing 
the amount or basing the exception on a percentage as well as the 
dollar amount. Others did not have a clear understanding of the meaning 
of ``predominantly for non-FIP resources.'' The language in the final 
rule has been modified to clarify the meaning of the exception and will 
provide additional flexibility. However, the intent of this exception 
was to capture situations where some FIP resources will be delivered in 
a contract but are of little consequence to the major purpose of the 
contract. Many such situations have been the subject of protest 
decisions issued by the General Services Board of Contract Appeals and 
an effort is being made to align the regulations with some of these 
decisions. The amendment should eliminate some of the situations that 
have created unnecessary protests. It provides broader flexibility to 
agencies in acquisitions of mixed requirements where the FIP resources 
required are only a minor portion of and do not constitute the 
principle purpose of a solicitation or contract, or where the FIP 
resources are of little consequence to the purpose of the contract. The 
exception applies to all FIP resources to be delivered to or acquired 
for use by the Government or users designated by the Government. 
Additional guidance will be provided in revisions to FIRMR Bulletin A-
1.
    (b) Suggestions were made to extend the exception for replacement 
of embedded FIP to other acquisitions for spare parts or upgrades. The 
intent of this exception extends only to replacement of embedded FIP 
resources that initially meet the criteria for exception from the 
FIRMR. Spare parts or upgrades (unless for the embedded resource) do 
not meet this description.
    (c) Suggestions were made for expansion of the language regarding 
OMB Circular A-94 or for issuance of guidance. Questions have arisen 
regarding the mandatory nature of the Circular; its application to 
purchase (where payments will extend over time) of FIP resources; to 
services, and to evaluation of sealed bids as well as proposals for FIP 
resources; and the rates to be applied in specific type acquisitions. 
The Circular applies to FIP resources, including services. Section 
8.c(4) of the Circular specifically addresses information technology 
requirements. The Circular is mandatory in some situations, but may not 
be in other situations (e.g., for some acquisitions for less than three 
years). The rate to be used depends on the type of analysis. An agency 
must, after review of the Circular, make a determination in each 
situation as to whether it applies and whether the use of present value 
factors would make a difference in final prices/costs. The intent of 
this amendment is to direct agencies to the Circular as a resource in 
evaluations of bids and proposals, since it replaces rescinded OMB 
Circular A-104, which was previously used. Details in the regulation 
could cause confusion, since the Circular may be applied differently in 
various situations. OMB will assist agencies with the bulletin. 
Agencies should provide internal guidance. FAR 7.4 contains some 
guidance on lease vs. purchase buys that may be helpful. GSA will 
consider additional guidance for FIP resources as the Acquisition 
Guides are updated.
    (d) There were proposals that GSA provide exceptions for broad 
categories of equipment, such as building support systems. Exceptions 
for specific categories of equipment are not listed in the regulation 
itself. GSA will take these suggestions under consideration in making 
appropriate revisions in FIRMR Bulletin A-1.
    (2) Explanations of the amendments follow:
    (a) Part 201-1 and subpart 201-39.1 are amended to be responsive to 
agency concerns that the replacement of FIP resources that initially 
were excepted from FIRMR applicability as embedded FIP equipment should 
also be excepted. Since the FIP resources would be used in the same 
manner as used initially, the amendment grants an exception to FIRMR 
applicability for the replacement of any FIP equipment, software, or 
related supplies used in the embedded FIP equipment that has already 
been granted an exception under Sec. 201-1.002-2(e), regardless of the 
cost of the replacement resources. This change also clarifies that the 
criteria for excepting embedded FIP equipment applies to an individual 
product and not to all the products being acquired.
    (b) Part 201-1 and subpart 201-39.1 are also amended to provide an 
exception to FIRMR applicability for small amounts of FIP resources 
that will be delivered to the Government when an acquisition is 
primarily for other purposes and the FIP resources constitute a minimal 
or insignificant part of the contract. Currently, the FIRMR applies to 
all FIP resources delivered to a Federal agency or users designated by 
the agency, no matter how minimal. Given the legislative exceptions for 
FIP resources that are not ``significant'' or are ``incidental to the 
performance of a Federal contract.'' GSA believes that a FIRMR 
exception is appropriate for acquisitions of FIP resources with a 
relatively low dollar value when the principal purpose of the 
solicitation or contract is for non-FIP resources. Accordingly, the 
FIRMR is being revised to except such acquisitions when the value of 
the FIP resources does not exceed $500,000 or where the resources are 
of little consequence to the major purpose of the contract.
    (c) A new Sec. 201-1.002-3 is being added to show that guidance on 
understanding FIRMR applicability provisions is available in FIRMR 
Bulletin A-1. Some agencies asked for additional information or how to 
interpret FIRMR applicability provisions because they have been unaware 
of the existence of the guidance already available in Bulletin A-1. The 
addition of this section will correct that deficiency.
    (d) Subpart 201-3.001 is being amended to explain the nonmandatory 
nature of FIRMR bulletins. There is a perception, among some users of 
the FIRMR, that FIRMR bulletins are regulatory in nature. While there 
may be a few procedures in FIRMR bulletins that may need to be complied 
with to be in consonance with the regulation, FIRMR bulletins are not 
regulatory. They are issued to provide information and guidance that 
helps agencies acquire or manage FIP resources, explain procedures for 
using GSA programs, and assist in interpreting the provisions of the 
Brooks Act.
    (e) Sections 201-20.203-2, 201-39.14-1, and 201-39.1501-1 are 
amended to reflect the fact that OMB Circular No. A-94 should now be 
used not only as the basis of analyzing the cost of alternatives when 
doing analyses of alternatives, but also in calculating bid and 
proposal prices/costs. OMB Circular A-94 replaces the guidance in OMB 
Circular A-104, used previously in the evaluation of bids and 
proposals.
    (3) GSA has determined that this rule is a significant rule for the 
purposes of Executive Order 12866. It is certified that this rule will 
not have a significant economic impact upon a substantial number of 
small entities under the Regulatory Flexibility Act of 1980 (5 U.S.C. 
601, et seq.).

List of Subjects in 41 CFR Parts 201-1, 201-3, 201-20, and 201-39

    Archives and records, Computer technology, Telecommunications, 
Government procurement, Property management, Records management, and 
Federal information processing resources activities.

    Accordingly 41 CFR parts 201-1, 201-3, 201-20 and 201-39 are 
amended as follows:

PART 201-1--APPLICABILITY AND AUTHORITY

    1. The authority citation for part 201-1 continues to read as 
follows:


    Authority: 40 U.S.C. 486(c) and 751(f).


    2. Section 201-1.002-2 is amended by redesignating paragraphs (d) 
and (e) as (e) and (f), respectively; adding a new paragraph (d); 
revising newly designated paragraph (f); and by adding new paragraph 
(g) to read as follows:


Sec. 201-1.002-2  Exceptions.

* * * * *
    (d) Where the value of the FIP resources to be delivered does not 
exceed $500,000 and constitutes only a minimal dollar amount of the 
contract, or is of little consequence to the major purpose of the 
contract, the FIRMR does not apply.
* * * * *
    (f) The FIRMR does not apply to the acquisition, management, and 
use of products containing embedded FIP equipment when: (1) the 
embedded FIP equipment would need to be substantially modified to be 
used other than as an integral part of the product, or (2) the dollar 
value of the embedded FIP equipment is less than $500,000 or less than 
20 percent of the value of the product, whichever amount is lower. 
Embedded FIP equipment is FIP equipment that is an integral part of the 
product, where the principal function of the product is not the 
automatic acquisition, storage, manipulation, management, movement, 
control, display, switching, interchange, transmission, or reception of 
data or information. In an acquisition where multiple products are 
acquired, the exception applies to each discrete product.
    (g) The FIRMR does not apply to the acquisition, management, and 
use of FIP resources that will be used in or as embedded FIP resources 
(equipment, software or supplies) in products excepted from FIRMR 
coverage under Sec. 201-1.002-2(f). This exception includes replacement 
or upgrades of the embedded FIP resources, regardless of the cost.

    3. Section 201-1.002-3 is added as follows:


Sec. 201-1.002-3  Procedures.

    FIRMR Bulletin A-1 provides an analytical framework, guidance, and 
examples for use in determining whether the FIRMR applies to an 
acquisition. Agencies should use this bulletin to assist them in 
understanding FIRMR applicability provisions.

PART 201-3--THE FIRMR SYSTEM

    4. The authority citation for part 201-3 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c) and 751(f).

    5. Section 201-3.001 is amended by revising paragraph (b)(1) to 
read as follows:


Sec. 201-3.001  General.

* * * * *
    (b) * * *
    (1) FIRMR bulletins contain guidance and information on various 
information resources management subjects. FIRMR bulletins do not 
constitute binding authority, but should be used as an aid in 
understanding and using GSA programs and the FIRMR. They may contain 
procedures for use of GSA programs. FIRMR bulletins are published in 
appendix B of the looseleaf edition of the FIRMR and are available 
along with the FIRMR from GPO by subscription or on GSA's CD-ROM.
* * * * *

PART 201-20--ACQUISITION

    6. The authority citation for part 201-20 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c) and 751(f).

    7. Section 201-20.203-2 is amended by revising paragraph (c) to 
read as follows:


Sec. 201-20.203-2  Cost for each alternative.

* * * * *
    (c) Agencies shall follow the guidance in OMB Circular A-94 when 
calculating the cost of each alternative.

PART 201-39--ACQUISITION OF FEDERAL INFORMATION PROCESSING 
RESOURCES (FIP) BY CONTRACTING

    8. The authority citation for part 201-39 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c) and 751(f).

    9. Section 201-39.101-3 is amended by redesignating paragraphs 
(b)(4) and (b)(5) as (b)(5) and (6), respectively; adding new paragraph 
(b)(4); revising newly designated paragraph (b)(6); and by adding new 
paragraph (b)(7) to read as follows:


Sec. 201-39.101-3  Applicability.

* * * * *
    (b) * * *
    (4) Where the value of the FIP resources to be delivered does not 
exceed $500,000 and constitutes only a minimal dollar amount of the 
contract, or is of little consequence to the major purpose of the 
contract, the FIRMR does not apply.
* * * * *
    (6) The FIRMR does not apply to the acquisition, management, and 
use of products containing embedded FIP equipment when: (i) the 
embedded FIP equipment would need to be substantially modified to be 
used other than as an integral part of the product; or (ii) the dollar 
value of the embedded FIP equipment is less than $500,000 or less than 
20 percent of the value of the product, whichever amount is lower. 
Embedded FIP equipment is FIP equipment that is an integral part of the 
product, where the principal function of the product is not the 
``automatic acquisition, storage, manipulation, management, movement, 
control, display, switching, interchange, transmission, or reception of 
data or information.'' In an acquisition where multiple products are 
acquired, the exception applies to each discrete product.
    (7) The FIRMR does not apply to the acquisition, management, and 
use of FIP resources that will be used in or as embedded FIP resources 
(equipment, software or supplies) in products excepted from FIRMR 
coverage under Sec. 201-39.101-3(b)(6). This exception includes 
replacement or upgrades of the embedded FIP resources, regardless of 
the cost.
* * * * *
    10. Section 201-39.1402-1 is amended by revising paragraph (b) to 
read as follows:


Sec. 201-39.1402-1  Policies.

* * * * *
    (b) When payments are expected to vary among the alternatives being 
considered, or where payments will be made over an extended period, 
agencies should adjust prices and costs to present value and apply the 
results in source selection. Agencies should follow the guidance in OMB 
Circular A-94 regarding present value calculations.

    11. Section 201-39.1501-1 is amended by revising paragraph (b) to 
read as follows:


Sec. 201-39.1501-1  Policies.

* * * * *
    (b) When payments are expected to vary among the alternatives being 
considered, or where payments will be made over an extended period, 
agencies should adjust prices and costs to present value and apply the 
results in source selection. Agencies should follow the guidance in OMB 
Circular A-94 regarding present value calculations.

    Dated: August 15, 1994.
Julia M. Stasch,
Acting Administrator of General Services.
[FR Doc. 94-31595 Filed 12-22-94; 8:45 am]
BILLING CODE 6820-25-M