[Federal Register Volume 61, Number 122 (Monday, June 24, 1996)]
[Rules and Regulations]
[Pages 32584-32587]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-15366]
[[Page 32583]]
_______________________________________________________________________
Part V
Department of Energy
_______________________________________________________________________
48 CFR Part 917, et al.
Management and Operating Contracts; Interim Final Rule and Proposed
Rule
Federal Register / Vol. 61, No. 122 / Monday, June 24, 1996 / Rules
and Regulations
[[Page 32584]]
DEPARTMENT OF ENERGY
48 CFR Parts 917 and 970
[1991-AB-09]
Acquisition Regulation; Department of Energy Management and
Operating Contracts
AGENCY: Department of Energy.
ACTION: Interim final rule with request for comment.
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SUMMARY: The Department of Energy (DOE) today publishes an interim
rulemaking to set forth its policy regarding the competition and
extension of the Department's management and operating contracts. Under
its policy, the Department affirms its commitment to provide for full
and open competition in the award of its management and operating
contracts, except where the Department determines that competitive
procedures should not be used pursuant to one of the circumstances
authorized by the Competition in Contracting Act of 1984 (41 U.S.C.
254), as implemented in Part 6 of the Federal Acquisition Regulation.
This rulemaking implements one of the key recommendations of the
Department's contract reform initiative to improve its acquisition
system.
DATES: This interim rule is effective August 23, 1996. Written comments
should be forwarded no later than August 23, 1996.
ADDRESSES: Comments should be submitted to Connie P. Fournier, Office
of Policy (HR-51), Department of Energy, 1000 Independence Avenue, SW,
Washington, D.C. 20585; (202) 586-0545 (facsimile);
[email protected] (Internet).
The administrative record regarding this rulemaking that is on file
for public inspection is located in the Department's Freedom of
Information Reading Room, Room 1E-190, 1000 Independence Avenue, SW,
Washington, DC 20585.
FOR FURTHER INFORMATION CONTACT: Connie P. Fournier at (202) 586-8245.
SUPPLEMENTARY INFORMATION:
I. Background
II. Section-by-Section Analysis
III. Procedural Requirements
A. Review Under Executive Order 12866
B. Review Under Executive Order 12778
C. Review Under the Regulatory Flexibility Act
D. Review Under the Paperwork Reduction Act
E. Review Under Executive Order 12612
F. Review Under the National Environmental Policy Act
IV. Public Comments
I. Background
The Department's contracts for the management and operation of its
facilities have historically been subject to specialized rules
pertaining to their periodic extension. Under these rules, contained at
Department of Energy Acquisition Regulation (DEAR) 970.0001 and 917.6,
existing policy favored non-competitive extensions of incumbent
contractors. Competition was permitted only when it appeared likely
that the Government's position might be meaningfully improved in terms
of cost or performance and only then when it was determined that to
change a contractor would not be contrary to the best interest of the
Government. This resulted in noncompetition as the preferential norm.
The Department's Contract Reform Report, Making Contracting Work
Better and Cost Less (February 1994), in recommending a number of
changes, called for a reversal of this policy. Accordingly, the
Department published Acquisition Letter 94-14 in the Federal Register
(59 FR 50733), October 5, 1994, as an interim policy setting forth
guidelines for the competition or extension of the Department's
management and operating contracts. The interim policy established
competition as the preferential norm. Exceptions to competition were to
be made on a case-by-case basis, only in exceptional circumstances, and
only when authorized by the Head of the Agency. The intent was to
balance the positive effects of a competitive environment with the
recognition that long-term contractual relationships can facilitate
superior contractor performance, especially given the highly complex
and multi-faceted work performed under management and operating
contracts. The Department has competed, or is competing, a number of
management and operating contracts in accordance with this interim
policy.
After considering the comments received in response to the interim
policy, as set forth in Acquisition Letter 94-14, and its experience
under that policy, the Department has concluded that certain aspects of
the Acquisition Letter are appropriate for regulation, as modified for
consistency with applicable law. Other aspects of the Acquisition
Letter will be incorporated into nonregulatory internal Department
guidance. Under the rulemaking published today, the Department affirms
its commitment to full and open competition as the norm for its
management and operating contracts. Exceptions to the use of full and
open competition will be made on a case-by-case basis: (1) only in
accordance with the circumstances authorized by the Competition in
Contracting Act of 1984 (CICA) and Part 6 of the Federal Acquisition
Regulation (FAR), and (2) only when authorized by the Head of the
Agency. Adherence to the existing statutory requirements of CICA, as
implemented in FAR Part 6, preserves a preference for competition;
conforms the Department's decisionmaking process to noncompetitively
award contracts with Federal-wide standards found in statute and
regulation; and eliminates unnecessary, agency-specific regulations.
Today's interim rule supersedes both the Department's regulation that
created a noncompetitive norm and Acquisition Letter 94-14.
A notice of proposed rulemaking published elsewhere in this issue
of the Federal Register discusses changes proposed to the Department of
Energy Acquisition Regulation to implement other contract reform
recommendations. A third rulemaking that discusses the Department's fee
policies for profit making and nonprofit management and operating
contractors will be promulgated as a separate proposal. Together, these
three rulemakings constitute the Department's regulatory implementation
of certain key contract reform initiatives in its acquisition
regulation.
II. Section-by-Section Analysis
A detailed list of changes in the interim rule follows.
1. 917.602, Policy. This section is added to prescribe the
Department's policy to provide for full and open competition and the
use of competitive procedures in the award of management and operating
contracts, except as authorized by law and the Head of the Agency.
2. 917.605, Award, renewal, and extension. This section is amended
to remove the existing coverage at 917.605(b) that prescribes the
Department's internal processing and documentation requirements for
extend/compete decisions. This nonregulatory subject matter will be
reflected in internal Department guidance. A new section 917.605(d) is
added to provide for the conditional approval of any noncompetitive
extension (other than an extension accomplished by the exercise of an
option) subject to the successful achievement of the Government's
negotiation objectives. This section also permits adequate time to
compete the contract in the event that the negotiations cannot be
successfully concluded.
3. 970.0001, Renewal of management and operating contracts. This
section is
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amended to delete the Department's previous policy that competition
generally would be used only when it appeared likely that the
Government's position might be meaningfully improved in terms of cost
or performance, unless it was determined that to change a contractor
would be contrary to the best interest of the Government. This section
is removed and reserved for future use.
4. 970.17, Special Contracting Methods. This subpart is added to
provide for coverage concerning contract term and options to extend
management and operating contracts.
5. 970.1702-1, Contract term and option to extend. This section is
added to provide policy guidance on (1) the total period of performance
permitted under a management and operating contract and (2) the
requirements governing the exercise of an option to extend the term of
an existing contract. Paragraph (a) of the section states that
management and operating contracts may provide for a base period of up
to 5 years and may include an option to extend the period of
performance for up to an additional total of 5 years. The purpose of
permitting the inclusion of an option to extend the term of the
contract is to facilitate long-term contractual relationships where the
mission of the Department is best served by such an extension and to
reward contractors for superior performance under the contract.
Regarding the exercise of options under paragraph (b), the
contracting officer may exercise an option to extend a competitively
awarded contract only after assessing certain factors, including the
contractor's past performance. The decision of the contracting officer
must be approved by the Head of the Contracting Activity and the
cognizant Assistant Secretary(s).
6. 970.1701-2, Solicitation provision and contract clause. This
section is added to provide instruction to the contracting officer on
the application of the solicitation provision and contract clause
pertaining to the use of options in management and operating contracts.
7. 970.5204-73, Notice regarding option. This section is added to
subpart 970.52, Contract clauses for management and operating
contracts, to provide a solicitation provision for options to extend
the term of the contract.
8. 970.5204-74, Option to extend the term of the contract. This
section is added to subpart 970.52, Contract clauses for management and
operating contracts, to provide a contract clause for options to extend
the term of the contract.
III. Procedural Requirements
A. Review Under Executive Order 12866
This regulatory action has been determined not to be a
``significant regulatory action'' under Executive Order 12866,
``Regulatory Planning and Review,'' (58 FR 51735, October 4, 1993).
Accordingly, this action was not subject to review, under that
Executive Order, by the Office of Information and Regulatory Affairs of
the Office of Management and Budget (OMB).
B. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on
Executive agencies the general duty to adhere to the following
requirements: (1) eliminate drafting errors and ambiguity; (2) write
regulations to minimize litigation; and (3) provide a clear legal
standard for affected conduct rather than a general standard and
promote simplification and burden reduction. With regard to the review
required by section 3(a), section 3(b) of Executive Order 12988
specifically requires that Executive agencies make every reasonable
effort to ensure that the regulation: (1) clearly specifies the
preemptive effect , if any; (2) clearly specifies any effect on
existing Federal law or regulation; (3) provides a clear legal standard
for affected conduct while promoting simplification and burden
reduction; (4) specifies the retroactive effect, if any; (5) adequately
defines key terms; and (6) addresses other important issues affecting
clarity and general draftsmanship under any guidelines issued by the
Attorney General. Section 3(c) of Executive Order 12988 requires
Executive agencies to review regulations in light of applicable
standards in section 3(a) and section 3(b) to determine whether they
are met or it is unreasonable to meet one or more of them. DOE has
completed the required review and determined that, to the extent
permitted by law, the interim final regulations meet the relevant
standards of Executive Order 12988.
C. Review Under the Regulatory Flexibility Act
This rule is not subject to review under the Regulatory Flexibility
Act of 1980, 5 U.S.C. 601, et seq., because it is not subject to a
legal requirement to publish a general notice of proposed rulemaking.
D. Review Under the Paperwork Reduction Act
No new information collection or recordkeeping requirements are
imposed by this rule. Accordingly, no Office of Management and Budget
clearance is required under the Paperwork Reduction Act of 1980 (44
U.S.C. 3501, et seq.).
E. Review Under Executive Order 12612
Executive Order 12612, entitled ``Federalism,'' 52 FR 41685
(October 30, 1987), requires that regulations, rules, legislation, and
any other policy actions be reviewed for any substantial direct effects
on States, on the relationship between the Federal Government and the
States, or in the distribution of power and responsibilities among
various levels of government. If there are sufficient substantial
direct effects, then the Executive Order requires preparation of a
federalism assessment to be used in all decisions involved in
promulgating and implementing a policy action. The Department has
determined that this rule will not have a substantial direct effect on
the institutional interests or traditional functions of States.
F. Review Under the National Environmental Policy Act
Pursuant to the Council on Environmental Quality Regulations (40
CFR 1500-1508), the Department has established guidelines for its
compliance with the provisions of the National Environmental Policy Act
(NEPA) of 1969 (42 U.S.C. 4321, et seq.). Pursuant to Appendix A of
Subpart D of 10 CFR 1021, National Environmental Policy Act
Implementing Procedures (Categorical Exclusion A6), the Department has
determined that this rule is categorically excluded from the need to
prepare an environmental impact statement or environmental assessment.
IV. Public Comments
A. Written Comments
Although the interim regulations published in this rule are not
substantive regulations with the kind of impact that warrants prior
notice, the Department is nevertheless providing an opportunity for
public comment. Interested persons are invited to participate by
submitting data, views, or arguments with respect to the DEAR
amendments set forth in this rule. Three copies of written comments
should be submitted to the address indicated in the ADDRESSES section
of this rule. In addition, it is requested that you provide a copy of
your comments on a
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WordPerfect 6.1 or ASCII diskette. Comments may be sent to the Internet
address in the ADDRESSES section of this rule instead of the written
copies and diskette, provided they are transmitted in a WordPerfect 6.1
compatible format and include the name, title, organization, postal
address, and Internet address with the text of the comments. All
comments received will be available for public inspection in the
Department of Energy Reading Room, 1E-190, Forrestal Building, 1000
Independence Avenue, SW., Washington, D.C. 20585, between the hours of
9 a.m. and 4 p.m., Monday through Friday, except Federal holidays. All
written comments received on or before the date specified in the
beginning of this rule and all other relevant information will be
considered by the Department before taking final action. Comments
received after that date will be considered to the extent that time
allows. Any person submitting information which that person believes to
be confidential and which may be exempt from public disclosure should
submit one complete copy, as well as an additional copy from which the
information claimed to be confidential has been deleted. The Department
reserves the right to determine the confidential status of the
information or data and to treat it according to its determination. The
Department's generally applicable procedures for handling information
which has been submitted in a document and may be exempt from public
disclosure are set forth in 10 CFR 1004.11.
B. Public Hearing Determination
The Department has concluded that this rule does not involve any
significant issues of law or fact. Therefore, consistent with 5 U.S.C.
553, the Department has not scheduled a public hearing. However, a
public hearing will be held on the notice of proposed rulemaking
published elsewhere in this issue of the Federal Register on other
contract reform changes proposed to the Department of Energy
Acquisition Regulation. Any person who has an interest in those
proposed contract reform changes may request an opportunity to make an
oral presentation in accordance with the procedures described in that
rulemaking.
List of Subjects in 48 CFR Parts 917 and 970
Government procurement.
Issued in Washington, D.C., on June 7, 1996.
Richard H. Hopf,
Deputy Assistant Secretary for Procurement and Assistance Management.
For the reasons set out in the preamble, Chapter 9 of Title 48 of
the Code of Federal Regulations is amended as set forth below:
PART 917--SPECIAL CONTRACTING METHODS
1. The authority citation for Part 917 continues to read as
follows:
Authority: 42 U.S.C. 7254; 40 U.S.C. 486(c).
2. Subpart 917.6, Management and Operating Contracts, is amended to
add new section 917.602, Policy, to read as follows:
917.602 Policy.
(a) It is the policy of the Department of Energy to provide for
full and open competition in the award of management and operating
contracts, including performance-based management contracts.
(b) A management and operating contract may be awarded or extended
at the completion of its term without providing for full and open
competition only when such award or extension is justified under one of
the statutory authorities identified in FAR 6.302 and only when
authorized by the Head of the Agency. Documentation and processing
requirements for justifications for the use of other that full and open
competition shall be accomplished in accordance with internal agency
procedures.
3. Section 917.605 is revised to read as follows:
917.605 Award, renewal, and extension.
Conditional Authorization of Non-competitive Extension Made
Pursuant to Authority Under CICA. Authorization to extend by the Head
of the Agency shall be considered conditional upon the successful
negotiation of the contract to be extended in accordance with the
Department's negotiation objectives. The Head of the Contracting
Activity shall advise the Procurement Executive no later than 6 months
after receipt of the conditional authorization as to whether the
Department's objectives will be met and, if not, the contracting
activity's plans for competing the requirement.
PART 970--DOE MANAGEMENT AND OPERATING CONTRACTS
4. The authority citation for Part 970 continues to read as
follows:
Authority: Sec. 161 of the Atomic Energy Act of 1954 (42 U.S.C.
2201), sec. 644 of the Department of Energy Organization Act, Public
Law 95-91 (42 U.S.C. 7254).
970.0001 [Removed and reserved]
5. Section 970.0001 is removed and reserved.
6. Subpart 970.17, Special contracting methods, is added to read as
follows:
970.17 Special contracting methods.
970.1702-1 Term of contract and option to extend.
970.1702-2 Solicitation provision and contract clause.
970.1702-1 Term of contract and option to extend.
(a) Contract term. Effective work performance under a management
and operating contract is facilitated by the use of a relatively long
contract term of up to ten (10) years. Accordingly, management and
operating contracts shall provide for a basic contract term not to
exceed five (5) years and may include an option(s) to extend the term
for additional periods; provided, that no one option period exceeds
five (5) years in duration and the total term of the contract,
including any options exercised, does not exceed ten (10) years. The
specific term of the base period and of any options periods shall be
determined at the time of the authorization to compete or extend the
contract. The term ``option'' as used herein means a unilateral right
in the contract by which the Government can extend the term of the
contract. Accordingly, except as may be provided for through the
inclusion of an option(s) in the contract to extend the term, any
extension to continue the contract with the incumbent contractor beyond
its term shall only occur when such extension can be justified under
one of the statutory authorities identified in FAR 6.302 and when
authorized by the Head of the Agency.
(b) Exercise of option. As part of the review required by FAR
17.605(b), the contracting officer shall assess whether competing the
contract will produce a more advantageous offer than exercising the
option. The incumbent contractor's past performance under the contract,
the extent to which performance-based management contract provisions
are present, or can be negotiated into, the contract, and the impact of
a change in a contractor on the Department's discharge of its programs
are considerations that shall be addressed in the contracting officer's
decision that the exercise of the option is in the Government's best
interest. The contracting officer's decision shall be approved by the
Procurement Executive and the cognizant Assistant Secretary(s).
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970.1702-2 Solicitation provision and contract clause.
(a) The contracting officer shall insert a provision substantially
the same as the provision at 48 CFR (DEAR) 970.5204-73, Notice
Regarding Options, in solicitations when the inclusion of an option to
extend the term of the contract has been authorized.
(b) The contracting officer shall insert the clause at 48 CFR
(DEAR) 970.5204-74, Option to extend the term of the contract, when the
inclusion of an option to extend the term of the contract has been
authorized.
7. Subpart 970.52 is amended by adding sections 970.5204-73, Notice
regarding options, and 970.5204-74, Option to extend the term of the
contract, to read as follows:
970.5204-73 Notice regarding options.
As prescribed in 48 CFR (DEAR) 970.1702-2(a), insert the following
provision:
Notice Regarding Options (June 1996)
The contract resulting from this solicitation is expected to
include one or more options to extend the term of the contract.
Exercise of any option to extend the term of contract will be at the
unilateral right of the Department of Energy. The contractor's
performance under the basic contract, including any previously
exercised options, will be among the significant considerations in
the Department's decision to exercise any option.
970.5204-74 Option to extend the term of the contract.
As prescribed in 48 CFR (DEAR) 970.1702-2(b), insert the following
clause:
Option to Extend the Term of The Contract (June 1996)
(a) The Department of Energy may unilaterally extend the term of
this performance-based management contract by written notice to the
contractor within [Insert the period of time in which the
contracting officer has to exercise the option]; provided, that the
Department of Energy shall give the contractor a preliminary written
notice of its intent to extend at least twelve (12) months before
the basic term of the contract expires. The preliminary notice does
not commit the Department of Energy to an extension.
(b) The option(s) to extend the contract is identified in
[Specify section of contract and clause number and name] of the
contract. The Department of Energy may exercise any, or all, of the
options identified in the contract. The total duration of this
contract, including the exercise of any option(s) under this clause,
shall not exceed 120 months.
[FR Doc. 96-15366 Filed 6-21-96; 8:45 am]
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